Activist Sarissa Notches Win as Ariad CEO Announces Retirement

Apr 29 2015 | 1:00pm ET

The resignation of Ariad Pharmaceuticals CEO Harvey Berger is a major victory for the activist hedge fund, which has publicly campaigned for his ouster for months.

Sarissa Capital, which owns nearly 7% of Ariad stock and is the company’s largest shareholder, began ramping up the pressure after it gained a seat on the biotech company’s board in 2014. It filed proxy materials in February calling for, among other things, Berger's ouster.

Berger's resignation will be effective at the earlier of the appointment of his successor or December 31, 2015. The company has formed an search committee, chaired by Sarissa CEO Alex Denner, to find a suitable candidate.

In addition to Berger's resignation, Ariad also announced the appointment of former Takeda Pharmaceuticals executive Anna Protopapas, a Sarissa nominee, to its board. 

In return, Sarissa has agreed to pull its proposed slate of directors up for vote at the company’s 2015 annual meeting in June.

The move is the latest in a series of capitulations by companies faced with expensive and highly visible activist campaigns by hedge funds. 

Alliance Trust, which settled with Elliot Advisors earlier this week rather than risk a potentially embarrassing defeat in a shareholder vote, recently calculated its battle with the activist fund cost it more than £3 million and months of distraction. 

Sarissa was formed in 2013 by Denner, who ran biotech investing for Carl Icahn for five years, and Richard Mulligan, a Harvard professor who worked with Denner and Icahn on several investments. 

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